Caribbean hotel luxury

Before recession became a household word, hotels in the Caribbean were already experiencing a 16 percent drop in their bottom-line profits, the latest report from PKF Hospitality Research reveals.

According to Caribbean Trends® in the Hotel Industry, visitors to the Caribbean decreased by 4.0 percent in 2008. In turn, hotel revenues fell by 4.5 percent. “Even though Caribbean hotel managers were able to cut expenses by 1.1 percent in 2008, it was still not enough to offset the 4.5 percent decrease in total revenue,” explains Scott Smith, MAI, senior vice president of PKF Consulting. “The net result was an average 16.0 percent decline in unit-level profits for the typical Caribbean hotel in 2008.”

Certainly the economic pattern of 2009 hasn’t improved those numbers one jot. Some things our hotelier friends can control; others are simply situations where they bite the bullet and pay, like utility costs and insurance rates. Those shot up 9.1 and 6.3 percent in 2008.

Classy digs

You can guess the immediate consequences: hotel construction has ground to a halt (an estimated 49 percent of lodging projects won’t get off the drawing board even), and the Four Seasons Great Exuma closed its doors altogether. Hotel managers are cutting staff, even though wages are already lower than U.S. minimums, and are looking at green energy options to save moola in that corner. Thankfully, some of the governments are subsidizing or waiving property taxes in an effort to help their islands’ number one source of income.

PKF breaks it down like this:

Caribbean Resorts versus Comparable U.S. Resorts
2008 Percent of Total Revenue
—————————–

Caribbean         U.S.
Performance Measurement        Resorts        Resorts
———————–        ——-        ——-
Departmental Expenses           42.7%          43.8%
Departmental Profit                 57.3%          56.2%
Undistributed Expenses          30.1%          24.1%
Income Before Fixed Charges  27.2%          32.1%
Mgmt. Fees, Property Taxes,
Insurance                                 7.0%           6.4%
Net Operating Income*           20.2%          25.8%

Number of Rooms                  312               320
Occupancy                            68.0%           70.1%
A.D.R.                                $221.28        $224.24

* Note:  Before deductions for capital reserve, rent, interest, income
taxes, depreciation and amortization

And this is with crossed fingers that Mother Nature doesn’t go in there with a hurricane or two this fall and rearrange a few hotel walls along with the furniture.

The real long-term ramification, of course, is that hot deals to these resorts aren’t sustainable if people want to enjoy a relaxing, upscale vacation in the Caribbean in the next decade. But now that the 2-for-1s, free nights, airfare credits, and other perks have been in place for most of 2009, the danger is that travellers come to expect these prices as the norm. It will take a boring crash course in business economics to change that mindset — or another clever way to sell higher rates that are nothing more than the cost of doing business here in the first place.

Photography: dmap Travel Guide, davitydave

The 2009 six month hotel survey by Hogg Robinson Group shows up a mixed bag of results for the hotel industry and business travel.

Red Square, Moscow

To start with, Moscow retains pole position as the world’s costliest city for business travelers, even though the year on year rate declined by a whopping 14%.

Abu Dhabi – the only city in the survey to have achieved average rate growth of 5% in real terms when measured in local currency – came in second.

The remaining slots in the top 10 list are filled by Paris, New York City, Milan, Geneva, Hong Kong, Dubai, Copenhagen and Rome.

The results show that corporates are travelling smarter as they look to control travel costs and maximise their return on travel expenditure.

Margaret Bowler, Director of Global Hotel Relations at HRG, says that ”The shift in business practices has been substantial and those that adapt well can reap benefits from the unusual trading environment. Hotels are adopting sensible pricing in order to maintain current occupancy levels. At HRG, we advise clients to take advantage of the current conditions and use these to consolidate travel policies and negotiate better rates.”

Interestingly, though, the survey found that the high-end market is holding up well, with 5-star hotels clocking in the highest average rate increase of 7.7%, suggesting that hoteliers are holding out for rates at the expense of lower occupancy levels.

HRG’s data also suggests that the budget sector is feeling the heat from 3 and 4 star hotels. It has been squeezed due to its inability to respond more rapidly and at short notice in terms of flexible pricing to offer more competitive rates to suit market needs.

(Photo credit – yeowatzup)

Hyatt Hotels Corp., held privately by Chicago’s Pritzker family, is all set to go public and registered with the SEC for a $1.15b initial public offering (IPO).

Hyatt

The Hyatt IPO will be managed by Goldman, Sachs & Co., with Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc. acting as joint lead managers.

Hyatt Hotels Corporation intends to list the Class A common stock on the New York Stock Exchange under the symbol “H.” The number of shares to be offered and the price range for the offering have not yet been determined. 

A portion of the net proceeds could be used to acquire or invest in new properties or other businesses that complement Hyatt’s existing business. Hyatt will not receive any of the proceeds from the sale of shares by the selling stockholders.

According to the filing, the Pritzker family currently controls 85% of the company’s stocks, while the remaining is split between Goldman Sachs Capital Partners (7.5%) and Madrone Capital Partners (6.1%). The Goldman Sachs affiliate and Madrone Capital Partners (linked to Walmart’s Walton family) were allowed to invest $500 million each in 2007.

But the SEC filing does not say which of Hyatt’s current shareholders are planning to sell their shares. In a press statement, Hyatt simply says that “The shares of Class A common stock to be sold in this offering are proposed to be sold by Hyatt and/or certain existing stockholders.”

Hyatt Hotels Corp.,  based in Chicago, owns 413 properties around the world under brands including Andaz, Park Hyatt, Grand Hyatt and Hyatt Regency. Hyatt employs 80,000 people in 45 countries.

Hyatt was founded by Jay Pritzker in 1957. The Hyatt empire became a public company in 1962, but In 1968, Hyatt International was formed and subsequently became a separate public company. Hyatt Corporation and Hyatt International Corporation were then taken private by the Pritzker family business.

Opposing factions of the Pritzker family have long been at odds over cashing in on their stake, until a $1 billion settlement made to siblings Liesel and Michael Pritzker by their father finally cleared the way for this IPO.

You can see the SEC filing here. For more information about Hyatt Hotels Corp., visit www.hyatt.com/.

Like every other sector, the hotel industry too has it’s own set of A-list bloggers who lead the conversation. These 15 hotel blogs and their bloggers listed here offer their readers the best hospitality experience, so to speak.

Hotelchatter

Hotel Check-in – USA Today blog run by Barbara De Lollis, focusing mainly on business travel and new developments in the hotel industry.

Also shares plenty of hotel deals and entertaining news stories related to hotels. Hotel Check-in leverages it’s brand quite often to attract guest posts by CEO’s and senior executives from the hotel industry.

Uptake Hotels blog – Very dedicated group of hotel bloggers, with plenty of reviews and tips for finding the right hotels. Color me biased, but Uptake’s Hotels blog would merit a mention on this list even if it was being compiled elsewhere.

Hotel News Now -  HNN is a division of Smith Travel Research, which gives this blog exclusive access to all kinds of data and insight into the latest trends and reports for the global hotel industry. It also helps to have the Managing Director, President and CEO of STR blogging for you. Very useful blog if you need the latest facts and figures for presentations or articles.

Hotels Magazine – Not just a blog, but blogs – 10 of them. Each blog authored by industry experts with decades of relevant industry experience. For example, Lyndall De Marco, co-author of the Eco-Speak blog, was executive director of the International Tourism Partnership and runs a consultancy which helps clients merge profitability with sustainability. The other co-author, Ray Burger, is president and founder of Pineapple Hospitality Inc., with over 30 years of experience in the lodging industry.

Hotel Law Blog – This blog is a part of the Global Hospitality Group, and again, authored by a terrific group of heavily experienced hotel lawyers led by Jim Butler and senior hospitality industry executives. If it has anything to do with hotel financing or legal issues affecting the hospitality industry, then you’ll find it here.

Three hotel bloggers who seem to have all their ducks lined up properly include Josiah Mackenzie of HotelMarketingStrategies.com, the Happy Hotelier, and Guillaume Thevenot of Hotel-Blogs.com.

Mention also needs to be made of two blogs – Gadling and LA Times’ Daily Deal blog - which aren’t exactly limited to hotels. It’s a compliment to these blogs and their writers that the range, quality and quantity of their hotel related content beats the offerings of many blogs which are solely devoted to hotels.

You might also enjoy checking out these three ’company’ blogs – Bill Marriott’s Blog (Marriott on the Move), the Dealbase blog, and Oyster Hotel Reviews blog.

And lastly, did you know about the TA hotel reviews which don’t get published? You can find them on the We Are Not Making This Up blog.